- NZD/USD falls further to 0.6140 as the Fed’s hawkish remarks improve the US Dollar’s appeal.
- Sost US inflation reports have prompted Fed rate-cut prospects for September.
- China’s weak data weighs on the New Zealand Dollar.
The NZD/USD pair extends its losing streak for the third trading day on Monday. The Kiwi asset declines to near 0.6140 as the US Dollar (USD) clings to gains amid a tug of war between Federal Reserve (Fed) and market speculation for how much interest rates will be reduced this year.
Fed policymakers have acknowledged that the progress in inflation declining to bank’s target of 2% has resumed after the release of the cooler consumer and producer inflation reports for May. However, they want to see price pressures declining for months before considering rate cuts. Therefore, they expect room for only one rate-cut this year.
However, soft inflation reports have boosted market expectations for two rate cuts this year. The CME FedWatch tool shows that the Fed will start reducing interest rates from the September meeting and will cut again in the November or December meeting.
Meanwhile, the New Zealand Dollar weakens after various Chinese economic indicators suggested uncertainty over the economic outlook. In May, the House Price Index deflated by 3.9%, and Industrial Production and YTD Fixed Asset Investment grew slower than expected by 5.6% and 4%, respectively. However, Retail Sales rose by 3.7%, beat expectations of 3% and the prior release of 2.3%. The New Zealand (NZ) economy is one of the leading trading partners of China, and the latter’s weak economic performance impacts the Kiwi dollar.
NZD/USD declines while attempting to deliver a breakout of the Inverted Head and Shoulder (H&S) chart pattern formed on a daily timeframe. The neckline of the above-mentioned chart pattern is marked near 0.6215. The asset has declined below the 20-day Exponential Moving Average (EMA) near 0.6130, which indicates an uncertain near-term outlook.
The 14-period Relative Strength Index (RSI) falls back into the 40.00-60.00 range, indicating that the upside momentum has faded.
Fresh downside would appear if the asset breaks below April 4 high around 0.6050 This would drag the asset towards the psychological support of 0.6000 and April 25 high at 0.5969.
On the contrary, a reversal move above June 12 high of 0.6222, which will expose the asset January 15 high near 0.6250, followed by January 12 high near 0.6280.
NZD/USD daily chart
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD regains traction above 1.1000 ahead of US CPI release
EUR/USD has found fresh buyers and jumps above 1.1000 in the European session on Thursday. The pair gains on the German coalition deal and Trump's 90-day pause on reciprocal tariffs, which have lifted risk senitment while exacerbating the US Dollar pain ahead of the US CPI data release.
GBP/USD trades firm above 1.2850, US CPI data awaited
GBP/USD sustains the rebound above 1.2850 in European trading hours on Thursday. The British Pound capitalizes on risk appetite, courtesy of Trump's tariff pause, allowing the pair to recover ground. But further upside hinges on the US CPI data and US-Sino trade updates.
Gold price enters hotspot region with new all-time high possible
Gold price is delivering a jaw-breaking performance this Thursday in the early trading session, moving around $3,107 at the time of writing. Since Tuesday morning, the precious metal has rallied nearly 5.00%. The main driver for the rally came from the United States President Donald Trump who announced a 90-day pause to higher tariffs on 56 countries and the European Union, which will now be taxed at the 10% baseline rate.
US CPI data set to reveal March inflation dip as markets weigh impact of Trump’s tariffs
As measured by the CPI, inflation in the US is set to rise at an annual pace of 2.6% in March, down slightly from the 2.8% reported in February. Core CPI inflation, which excludes the volatile food and energy categories, is expected to ease to 3% in the same period from a year earlier
Trump’s tariff pause sparks rally – What comes next?
Markets staged a dramatic reversal Wednesday, led by a 12% surge in the Nasdaq and strong gains across major indices, following President Trump’s unexpected decision to pause tariff escalation for non-retaliating trade partners.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.